Innovation efficiency of manufacturing industry: A case study of Shandong province in China

Although there is a great deal of literature focused on high-tech R&D, there is much less literature examining the whole manufacturing industry R&D and analyzing its performance. This paper addresses this short fall by focusing on the manufacturing industry in China and analysing its R&D performance. The authors use Data Envelopment Analysis (DEA) to evaluate 29 sectors of manufacturing in Shandong province, a region with a very competitive manufacturing system. The analysis indicates that only three of those manufacturing sectors are efficient. When efficiency was decomposed into technical and scale efficiency, there are eight sectors with HTE (High Technical Efficiency) and LSE (Low Scale Efficiency), eleven sectors with LTE (Low Technical Efficiency) and HSE (High Scale Efficiency), seven sectors with LTE (Low Technical Efficiency) and LSE (Low Scale Efficiency). The results reflect lower technological innovation capability of manufacturing R&D in China.